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UPDATE 1-Cargo carrier Arrow Air bankrupt, to liquidate

Thu Jul 1, 2010 9:49am EDT

* Company to liquidate after failing to find buyer

* More than 75 percent of workforce fired

* Arrow had emerged from bankruptcy in 2004

* MatlinPatterson affiliate has 95 percent equity stake

NEW YORK, July 1 (Reuters) - Arrow Air Inc, a Miami-based cargo carrier, has filed for bankruptcy protection and plans to liquidate after failing to find a buyer.

The 60-year-old company, which operated as Arrow Cargo and once had more than 3,500 customers, halted operations on Tuesday and filed a Chapter 11 petition on Wednesday in the U.S. bankruptcy court in Miami.

Arrow had emerged from a prior bankruptcy in June 2004. An affiliate of MatlinPatterson LP, a New York-based private equity firm specializing in distressed debt, owns a 95 percent equity stake, court records show.

According to its bankruptcy petition, Arrow has between $10 million and $50 million of assets, and between $100 million and $500 million of liabilities. Its parent Arrow Air Holdings Inc also sought court protection.

In a court filing, Arrow said rising jet fuel prices outpaced its ability to boost prices for customers. This resulted in "significant recurring operating losses" and a large operating deficit.

Arrow said it filed for court protection after "protracted negotiations" failed to result in a sale of the company.

It said an "orderly liquidation" will result in better returns for creditors.

Arrow said it fired all but 132 of its 540 employees after ending service.

The case is In re: Arrow Air Inc, U.S. Bankruptcy Court, Southern District of Florida, No. 10-28831. (Reporting by Jonathan Stempel; Editing by Derek Caney)